Mob Muscles in on Market Mafia-run stock market scams more widespread than officials thought
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nydailynews.com
By GREG B. SMITH
Daily News Staff Writer
Sunday, September 10, 2000
Then Robert Gallo applied to be a registered stockbroker, he mentioned his only previous experience was as a labor foreman. He did not say anything about his reputed association with one of the nation's largest crime families, New York's Genovese clan.
Mafia-run stock-market firms focus on violence and ripping off clients.
Once Gallo joined the Monitor Investment Group at 20 Exchange Place, however, he acted in a manner more consistent with a character in "The Sopranos" than someone who keeps track of "Moneyline News Hour."
On June 14, Gallo was indicted along with 119 others in the biggest securities fraud case in U.S. history. Since then, law enforcement officials and financial regulators have come to believe the mob's influence on Wall St. may be even greater than they once supposed.
The five New York Mafia families, say authorities, have figured out that the current bull market has made it ripe for the picking. Officials see increasing cooperation among crime families to divide up the Wall Street pie.
"They are getting more together," said Barry Mawn, director of the FBI's New York office.
Vincent Langella, suspect in mob fraud bust, after June arraignment.
"They're apt to be taking advantage of the good times. They know how we look at them. If they can branch out in a new area where we're not as aware, that's to their advantage."
Investigators, prosecutors and regulators with the National Association of Securities Dealers and the Securities and Exchange Commission all agree that the mob has lurked at the margins of Wall Street for years.
But now for the first time, prosecutors say, a mob boss is receiving a per share "mob tax" in a stock scam.
Alphonse (Allie Boy) Persico, reputed acting boss of the Colombo crime family, is getting 6 cents for every share the mob secretly controls in various pump-and-dump schemes, prosecutors allege.
Assistant U.S. Attorney Patrick Smith, who is leading the 120-defendant mob-on-Wall-Street case for Manhattan U.S. Attorney Mary Jo White, said the money is funneled through Persico's cousin, Frank, a registered broker since the end of the last bull market — 1988.
Frank Persico
Frank Persico, an alleged Colombo associate, along with Gallo and Vincent Langella, another reputed Colombo associate, represents the new breed of rising Mafia star — the wiseguy broker.
A review of their résumés reveals a trail of fraud, as they jumped from one scam brokerage house to another. (All three have been indicted in various securities fraud schemes).
For instance, from January 1989 through December 1992, Persico worked at A.S. Goldmen & Co. He jumped to J. W. Barclay from March 1993 through February 1994, then to Meyers Pollack Robbins through June 1995. He moved to William Scott & Co. through November 1997, then to First Liberty Investment Group.
All of these firms have been implicated in massive fraud in investigations by the Manhattan district attorney, the Manhattan U.S. attorney or the SEC.
A look at the history of these mob-connected brokerage houses shows how they operate within a few blocks of one another in the heart of Wall Street.
Robert Gallo (covering his face), an alleged wiseguy stockbroker, leaves court Thursday.
There, the crime families of New York — who often can't agree on anything — forged temporary and fragile alliances to make money.
At 17 State St., from 1993 through 1996, White Rock Investments was a cooperative agreement between the Bonanno, Colombo and Genovese families, according to Brooklyn federal prosecutors.
At 30 Broad St., in 1996 and 1997, Meyers Pollack Robbins was controlled by the same allegiance of the Bonanno, Colombo and Genovese families, according to court papers.
At 80 Broad St. and 84 William St., in 1996, First Liberty became a "joint venture" between the Bonanno and Colombo crime families, prosecutor Smith said.
And most recently, in 1998 through this June, DMN Capital Investments at 5 Hanover Square was run by the Bonanno and Gambino families, an indictment brought by a Manhattan federal grand jury alleges.
Investigators say Wall Street is a perfect spot for La Cosa Nostra strong-arm tactics: The mob is threatening white-collar yuppies, not longshoremen or Teamsters.
Salvatore Piazza and an unidentified woman
Typically, mobsters muscle in on a small brokerage house, then set up boiler rooms to hard-sell stock in classic pump-and-dump schemes.
Gangsters secretly own stock in worthless companies. They pay off corrupt brokers and stock promoters to pump up the stock's value by telling unwitting investors a company is about to go public or win a huge contract or be bought out by a major firm.
When the value rises significantly, they dump their stocks en masse, forcing the stock value to plummet and leaving in the lurch unwitting investors, who often are senior citizens.
When the scheme is exposed, they move on to another questionable firm.
"I call it the maggot run," said one regulator who spoke on condition of anonymity. "Brokers go from one sleazy firm to the next....They rip people off and they move on before they get caught or sued."
Michael Grecco and an unidentified woman leaving the courthouse.
At DMN Capital in Hanover Square, a former employee who spoke to the Daily News on the condition of anonymity described the atmosphere as "one big party."
Run by reputed Gambino associate James Labate and Bonanno associates Salvatore Piazza and Jeffrey Pokross, DMN frequently threw parties with hookers at midtown hotels, spending wildly as it scammed unsuspecting investors through hard-sell tactics, said the former DMN employee.
Prosecutors allege that to keep the party going, the gangsters kept stock promoters in line by threats of violence.
When one promoter was suspected by DMN's gangster principals of being an informant, Labate — who is not a broker — allegedly knocked him out with one punch, then stripped off his shirt to see if he was wearing a recording device, according to prosecutor Smith.
Like many of the mob-run firms, there inevitably came a day when there was a falling-out among thieves.
At DMN, Colombo associate Persico shot up a DMN computer when he decided he had been ripped off, Smith alleged.
At Meyers Pollack, a 6-foot-4 Genovese associate slapped a broker in the face. The broker sought help from a Bonanno associate, and both families arranged a Feb. 12, 1997, "sitdown" at Abbracciamento Italian restaurant near Canarsie Pier in Brooklyn.
Wall Street
As a result, prosecutors allege, the Bonanno family agreed to let the Genovese family control Meyers Pollack.
At Monitor Investment Group, the pump-and-dump scam began to fall apart when one of the stock brokers who was beaten decided to fight back with a lawsuit.
Registered broker Robert Grant, who now lives at an undisclosed location in fear of mob revenge, said in court papers he had been working at Monitor for several months when broker Robert Gallo told him there was a staff meeting in the conference room.
On Jan. 19, 1996, Grant and a co-worker walked in and, without warning and for no stated reason,were attacked. Gallo and five other brokers beat the two men with fists and kicked them to the floor. One man was clubbed with an office chair; the other was bitten on the back.
Grant later taped Gallo, who apologized for the beating but said he believed Grant was about to skip to another firm and take customers with him.
He then recited dialogue that could have come from just about any mob movie imaginable.
"The way youse carried yourselves, that youse was looking to do the wrong thing to us," he said. "Sometimes, you know, cooler heads don't prevail, but unfortunately, you know, it's nothing personal between me and you." |
